Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

November 14, 2022
2022-6099

US IRS 20222023 Priority Guidance Plan includes transfer pricing projects similar to last year

  • The United States (US) Internal Revenue Service (IRS) and Treasury continue to develop guidance on certain transfer pricing provisions.

  • Taxpayers should follow these developments when evaluating advanced pricing agreements and other transfer pricing issues.

In its 2022–2023 Priority Guidance Plan, the IRS and Treasury listed the projects to which the IRS and Treasury will allocate resources for plan year 1 July 2022, through 30 June 2023. This year's plan includes transfer pricing-related projects similar to those listed in the 2021-2022 guidance plan (see EY Global Tax Alert, US IRS and Treasury release 2021-2022 Priority Guidance Plan with new transfer pricing projects, dated 29 September 2021).

The IRS and Treasury again included the transfer pricing project, which would clarify the effects of group membership on arm's-length pricing (specifically for financial transactions) under the Internal Revenue CodeSection 482 regulations. Additionally, this year's guidance plan again includes updating (1) Revenue Procedure 2015-40, which provides procedures for requesting and obtaining assistance from the US competent authority under US tax treaties; and (2) Revenue Procedure 2015-41, which provides procedures for requesting and obtaining Advance Pricing Agreements.

Like the 2021–2022 plan, the guidance plan listed regulations under Sections 367 and 482 under the transfer pricing section. The project, which appears to combine two projects from the 2021–2022 Priority Guidance Plan, includes (1) regulations addressing the changes to Sections 367(d) and 482 "on aggregation, realistic alternatives, and the definition of intangible property"; and (2) regulations under 482 clarifying certain aspects of the arm's-length standard, including periodic adjustments.

Unlike the 2021–2022 plan, this year's guidance plan does not include parts of the project on Section 482 regulations concerning "coordination of the best method rule with guidance on specified methods for different categories of transactions" or "discretion to determine the allocation of risk based on facts and circumstances of transactions and arrangements.”

The guidance plan also includes, as it did last year, the inbound transfer of intangible property subject to Section 367(d). If a US person transfers any intangible property to a foreign corporation in an exchange under Sections 351 or 361, the outbound transfer is generally governed by Section 367(d).

Implications

The inclusion of several transfer pricing items on the priority guidance plan, along with increased IRS funding, suggests forward movement of potential enforcement efforts in transfer pricing. In addition, any modifications to Revenue Procedures 2015-40 and 2015-41 will give taxpayers more guidance on the criteria governing acceptance into the Advance Pricing and Mutual Agreement Program and how to structure requests for advance pricing agreements and US competent authority assistance.

_________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (United States), National Tax Department, International Tax and Transactions Services, Transfer Pricing

_________________________________________

Endnotes

  1. All “Section” references are to the Internal Revenue Code of 1986, and the regulations promulgated thereunder.
 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2023, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct